Copper surged to record highs in Shanghai and moved higher in New York. Futures on the London Metal Exchange are closed for the holidays and will reopen next week.
The moves higher in overseas copper futures markets are likely driven by thin year-end liquidity, which has amplified a broad melt-up across commodities.
Gold, silver and platinum jumped to all-time highs to extend a historic end-of-year rally for precious metals, with support from escalating geopolitical tensions and US dollar weakness.
via Bloomberg...
Spot gold rose as much as 1.2% to a peak above $4,530 an ounce.
Frictions in Venezuela, where the US has blockaded oil tankers and ramped up pressure on the government of Nicolás Maduro, have added to the precious metal’s haven appeal. Washington also launched a military strike against Islamic State in Nigeria in collaboration with the African nation’s government.
Spot silver for immediate delivery advanced for a fifth session, climbing as much as 5% to cross $75 an ounce. The white metal’s recent advance has been buoyed by speculative inflows and lingering supply dislocations across major trading hubs following a historic short squeeze in October.
Silver’s rally has been even more spectacular than gold’s as Bloomberg reports that vaults in London have drawn sizable inflows since the October squeeze, though much of the world’s readily available silver remains in New York as traders await the outcome of a US Commerce Department probe into whether imports of critical minerals pose a national security risk. The review could pave the way for tariffs or other trade curbs on the metal.
“You have a lot of trades or positions on paper: now you need to cover those with physical volume — and there’s not much supply to cover that demand,” said Manav Modi, commodity analyst at Motilal Oswal Financial Services Ltd.
“You need to power the paper silver with the actual silver,” he said.
Partly for the same reason, platinum has been on a tear in recent weeks - this month alone, it has risen by more than 40%. The metal traded above $2,400 an ounce for the first time since Bloomberg began compiling data in 1987.
In addition to strong physical demand, global supply of the metal used in the automotive and jewelry sectors is on course for a third annual deficit this year, due largely to disruptions in major producer South Africa.
Meanwhile at The Mint...
UBS analyst Nana Antiedu commented on the rally in precious metals this morning:
Strategist Joni Teves highlights a rally in precious metals, with gold, silver, and platinum reaching record highs ahead of the holiday season. Platinum surged 40%, driven by ETF inflows and strong trading volumes, while palladium gained 34%. A weaker dollar and broader risk appetite across equities and commodities supported the move, alongside tight conditions in silver and platinum group metals.
However, Joni notes the rally appears exaggerated, amplified by thin year-end liquidity, and lacks clear fundamental drivers. While she remains bullish on precious metals into 2026, short-term caution is advised as profit-taking risks rise amid record prices. The recent rally, though surprising in magnitude, reinforces upside risks to forecasts, but she prefers to stay on the sidelines for now, awaiting clearer market signals.
Back to copper: Goldman's commodity specialist, James McGeoch, recently warned of a "circular melt-up.” This prompted analyst Eoin Dinsmore to recently raise her 2026 price forecast for the LME from $10,650 per ton to $11,400.
LME copper's largest annual gain since 2009.
Everything you need to know about why copper prices are exploding higher:
LME Copper Hits Another Record; Goldman Trader Pinpoints Driver Behind Move
Copper Hits Record High; Goldman Warns A "Circular Melt-Up" Is Now Driving Global Market
Goldman Upgrades Copper Price Forecast Weeks After Warning About "Circular Melt-Up"
Meanwhile, some speculative fever from our friends in China is starting to crack. As Eric Yeung (@KingKong9888) explains in a post on X, UBS SDIC Silver Futures LOF - the only pure silver play you can get in China’s A-share market - is limit down (10%) for the second day in a row...
This is literally the only public fund in mainland China that focuses purely on silver, tracking the Shanghai Futures Exchange silver futures contracts. It’s a Listed Open-Ended Fund (LOF), so you can trade it on the exchange like a stock, but the subscription/redemption mechanics are a bit different from a true ETF – more like a traditional fund with field (场外) net value buying.
Now, with global silver smashing all-time highs (spot silver hit over $72 recently, best year since 1979), this fund has gone absolutely nuts. It’s up nearly 220% YTD on the secondary market, way outperforming the actual silver futures (around 128% gain). But here’s the big warning flag: extreme premium.
The trading price has been trading at massive premiums to NAV – peaking over 60%, even hitting 68% at one point. That’s insane! The fund manager (UBS SDIC) has been issuing risk warnings left and right – over 14 times this month alone – and they’ve slammed restrictions: daily purchase limits down to as low as 100-500 RMB for certain classes, temporary trading halts, etc., all to protect investors and cool things down.
We saw consecutive limit-ups (10% daily caps), then bam – a sharp limit-down to -10% recently as the frenzy turned. Classic volatility in a hyped-up commodity play.
Bottom line: If you want direct silver exposure in China’s domestic market, this is your only option right now – no other pure silver LOF or ETF here (overseas ones like SLV or PSLV don’t count). But right now? Super high risk with that crazy premium and wild swings. Be very careful – high premiums can evaporate fast, leading to big losses even if silver keeps rising.
If you’re chasing this, make sure you understand the LOF vs. ETF differences and the arbitrage risks. Stay safe out there...
Quite a catch-down...
Must read on the epic silver run:
And, as we detail here, China is desperately trying to quell rumors that it is causing the squeeze...
What an insane year for metals.
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